Pension Plans and Profit Sharing Plan (L2) Flashcards
(21 cards)
1
Q
Pension Plans
A
2
Q
Qualified Pension Plans
A
3
Q
Mandatory Funding (Pension Plans)
A
4
Q
Disallowance on In-Service Withdrawals (Pension Plans)
A
- Loans are allowed but usually NOT permitted because the contributions are primarily funded by the ER
- PPA 2006
○ DB Pension Plans can now provide in-service distributions to
participants who are age 62 or older
5
Q
Limited Investment in ER Securities (Pension Plans)
A
- Aggregate value of the ER securities CANNOT exceeds 10% of the FMV of the pension plan assets at the time the ER securities are purchased.
○ ER must offer a choice of at least 3 investment options, other than the ER securities
6
Q
Limited Investment in Life Insurance (Pension Plans)
A
7
Q
DB Pension Plan VS. DC Pension Plans
A
8
Q
DB Pension Plan Funding FORMULAS
A
9
Q
Cash Balance Pension Plan (DB)
A
10
Q
Conversions to Cash Balance Plan
A
- Occurs when an ER changes from a traditional DB Pension Plan into a Cash Balance Plan○ Cash balance plans are popular choice to get rid of OLD
EXPENSIVCE DB plan - Hybrid Plan 3 Requirements (Under PPA 2006)
○ Participants accrued benefit would be EQUAL or GREATER
than that of a similarly situated, younger participant (identical in
every respect EXCEPT AGE)
○ Interest rate used to determine the interest credit on the
account balance in the hybrid account MUST NOT BE GREATER
than a market rate of return, to be determined under
regulations to be issued
○ For plan years beginning AFTER 2017, the hybrid plan must
provide 100% vesting after 3 years of service
11
Q
Money Purchase Pension Plans (DC)
A
12
Q
Target Benefit Pension Plans (DC)
A
13
Q
Pension VS Profit Sharing
A
14
Q
Profit Sharing Plans (DC)
A
Profit Sharing Plans (DC)
15
Q
Cash or Deferred Arrangements (CODA) [401k plans]
A
16
Q
Roth IRA vs Roth 401k
A
17
Q
ADP Test
A
18
Q
Failing the ADP Test
A
19
Q
Stock Bonus Plan VS Profit Sharing Plan
A
20
Q
Stock Bonus Plans VS Employee Stock Ownership Plans (ESOPs)
A
21
Q
Safe Harbor 401k
A
